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Teori Organisasi Manajemen

Organizational, Size and Life Cycle

Sepni Darmaningsih


Tri Aprilian Jani


Laili Rachmawati


Studi Magister Akuntansi

Fakultas Ekonomi Dan Bisnis
Universitas Airlangga Surabaya

Every organization from locally owned restaurants and auto body shops to large international
firms, non profit organization and law-enforcement agencies wrestles with question about
organizational size, bureaucracy, and control. Organization size is a major contingency that
influences organization design and functioning. In this chapter we also discuss about
orgnisation life cycle, the structural characteristics at each stage and how bureaucracy in small
and big company.

Organizational Size: Is Bigger Better?

1. Pressure for Growth
There are a number of pressures for organization to grow. Companies in all industries
strive for growth to acquire the size and resources needed to compete globally, control
distribution channels and guarantee to access to markets. Large size enables companies to
take risks that could ruin smaller firms, and scale is crucial to economic health in
marketing- intensive companies. For example, as hospitals, medical groups, and insurers
strive to control healthcare costs and meet challenges brought about by federal healthcare
reform law.
2. Dilemmas of Large Size
Differences between large and small organization:

The explanation:
a. Large Organization are able to get back to business more quickly following a
disaster. They are standardized, mechanistic and complex.
b. Small companies are flexible and can be responsive. They often have flat
structure and a more organic, free-flowing management style.
c. Big-company/Small-company hybrid are combines a large corporations
resources and reach with a small companys simplicity and flexibility. The

divisional structure is one way some large organizations attain a bigcompany/small-company hybrid.
Organizational Life Cycle
The concept of an organizational life cycle is a useful way to think about organizational
growth and change, which suggest that organizational are born, grow older, and eventually
1. Stages of Life Cycle Development
Stages are sequential and follow a natural progression. There are four stages characterize
organizational development or organizational life cycle:
a. Entrepreneurial stage emphasize on creating a product or service and surviving in
the marketplace. the organization is informal and non-bureaucratic. Control is based
on the owners personal supervision. Growth is from a creative new product or
b. Collectively stage, organizations begin to develop clear goals and direction.
Employees indentify with the mission of the organization and spend long hours
helping the organization succeed.
c. Formalization stage, involves the installation and use of rules, procedures and control
systems. Communication is less frequent and more formal, and more likely to follow
the hierarchy of authority.
d. Elaborating stage focuses upon on collaboration and teamwork. All mature
organizations must go through periods of revitalization or they will decline, as shown
in the picture below:

2. Organizational Characteristic during The Life Cycle

As organizations evolve through the four stages of the life cycle, changes take place in
structure, control systems, innovation, and goals which summarized in the picture below:

Organizational Size, Bureaucracy, and Control

What Is Bureaucracy?
a. Weber`s concept of bureaucracy

It provided many advantages over organization forms based on favoritism, social

statues and so on.

However, it is a potential threat to basic personal liberties.

b. Bureaucratic characteristics tend to increase with large size.

c. Critics of bureaucracy tend to overlook the positive benefits of its impersonality and
conveniently disregard the limitation of alternatives to bureaucracy for dealing effectively
and fairly with large, complex administrative tasks.

Size and Structural Control

Formalization Large organization rely on rules, procedures, and paperwork to achieve

standardization and control across their large numbers of employee and departments,
whereas top managers can use personal observation to control a small organizations.

Centralizations the research on organization size that larger organizations permit

greater decentralization. In small start-up organization, on the other hand, the founder or
top executive can effectively be involved in every decision, large and small.

Personal Ratios another characteristic of bureaucracy relates to personal ratio for

administrative, clerical, and professional support staff.

Bureaucracy in a Changing World

Bureaucracy worked for the industrial age. The system does not necessarily work for
todays challenges. Today bureaucracy leads to inefficiency.
a. Organizing Temporary Systems
Organizations are creating temporary structures to respond to crisis, Incident command
system (ICS Ouchi). The basic idea behind the ICS is that organization can glide smoothly
between a highly formalized, hierarchical structured one needed to respond well to
unexpected and demanding environmental conditions.
b. Other Approaches to Busting Bureaucracy
Organizations are taking a number of other, less dramatic steps to reduce bureaucracy.
Many are cutting layers of hierarchy, maintaining light headquarter staff, empowering
lower-level workers, and the increasing professionalism of employee is attacking
bureaucracy. Professional partnership is made up completely of professionals. Meanwhile,
substantial autonomy and decentralized authority to make necessary decisions.
Bureaucracy versus Other Forms of Control
William Ouchi (1979, 833-848) suggested three control strategies that organizations could
adopt-bureaucratic, market, and clan. Each form of control uses different types of
information. However, all three types may appear simultaneously in an organization.


Bureaucracy Control
Market Control

Rules, Standards, Hierarchy, Legitimate, Authority

Clan Control

Tradition, Shared Values and Beliefs, Trust

Prices, Competition, Exchange Relationship

1. Bureaucracy Control
Bureaucratic control is the use of rules, policies, hierarchy of authority, written
documentation, standardization, and other bureaucratic mechanisms to standardize
behavior and assess performance. The primary purpose of bureaucratic rules and
procedures is to standardize and control employee behavior. More than one type of
authoritysuch as long tradition and the leaders special charismamay exist in
organizations, but rational-legal authority is the most widely used form to govern internal
work activities and decision making, particularly in large organizations.
2. Market Control
The idea of market control originated in economic. Market control occurs when price
competition is used to evaluate the output and productivity of an organization or its major
departments and divisions. For instance, the Department of Agriculture beat out IBM and
two other private companies to win the bid. Eighteen supervisors were laid off, costs were
cut by 25 percent, and the department won the bid. Different companies compete on price
to provide the functions and services required by the hub organization. The organization
typically contracts with the company that offers the best price and value.
3. Clan Control
Organizations that use clan control have strong cultures that emphasize shared values and
trust among employees. Clan control is important when ambiguity and uncertainty are
high. Managers act primarily as mentors, role models, and agents for transmitting values.

Organizational Decline and Downsizing

1. Definition and Causes
Every organization goes through periods of temporary decline. Organization
decline is a condition in which a substantial absolute decrease in an organizations
resource base occurs over a period. The decrease of an organizations resources is caused
Organizational atrophy
Environmental decline or competition
Downsizing refers to intentionally reducing the size of a companys workforce. The
reasons of decline consist of:

Quantitative Reasons

Qualitative Reasons

Reduced Workforce

Fierce Competition

A cutback in size of the organization The hostile takeover by large and established
reflects a reduced total market, reduced company is for the purpose of quick termination
need of products, lack of capability to of a competitor.
deliver the product, hence the underlying
reasons implies a decline.
Reduced Market Share
The reduction in the market share of the
company implies several issues, growing
competition if the total market is indeed
growing or is stable, or contraction of
overall market due to obsolete products or
Reduced Profit or Share Price

Lack of Customers
It happens due to unexpected decline in the niche
market, a change in consumer`s choice for a






organization fails to find proper market for the

Obsolete Technology

It provides the investors assessment of the Older organizations are very much vulnerable to



prospects of growth in future.


its newer technologies that can adversely impact its

core business and competencies.
Economic Downfall





customer spending multiple vendors compete for

the reduced market share. It also gets hard to
obtain fresh credit and finances for new ventures
or existing operations.
Organizational Atrophy (Leadership Crisis)
The organization size is large with excessive and
counterproductive. It usually occurs in older
organizations that have experienced healthy







hierarchical structure & the bureaucratic culture

of such large organization cause its slow
degeneration. Finally there is leadership crisis.

2. A Model of Decline Stages

This model suggests that decline, if not managed properly, can move through five
stages resulting in organizational dissolution.

a. Blinded Stage
The organization fails to recognize any of the internal or external changes that may
threaten its survival. Usually, causes for the decline are present but are not evident, the
leadership tends be insensitive and simply fails to make a connection between the
observed changes and a possible decline. Similarly the need for internal surveillance
cannot be ignored. It includes regular performance reviews employee satisfaction
surveys, training, skill development, and most importantly an open communication
mechanism to aid in vertical flow of information. The initial sign of decline are
usually very much visible and known to the bottom of organizational pyramid, but the
information fails to propagate upwards to its leaders.
b. Inaction Stage
The signs of deteriorating performance are clearly evident in this stage, but the
leadership still fails to take any action. The past successful approaches fail when the

current situations are very different. Finally, the aging leadership might simply lack
the knowledge and insight to comprehend the influence of the changing conditions.
c. Faulty Action Stage
The organization is clearly on its downfall and pressure to take corrective action is
very high. Due to high pressure, the decision makers tends to make quick, risky and
often fault decisions, that further accelerates the decline. Some of the prescribed cure
include introduction of new leadership, diversification of core business either through
self development or acquisitions and disinvestment in failing product lines.
d. Crisis Stage
The organization reaches a crisis stage when all prior actions have failed and it
becomes obvious that without any major change, its survival is questionable. At this
stage, the organization requires a massive structural change, a new strategy to deal
with the external environment and a new ideology to revitalize the ailing organization.
e. Dissolution Stage
The new leadership and the strategy had failed to revive the business and now their
responsibility lies in proper dissolution of the organization and its resources.

3. Downsizing Implementation
Downsizing has become a common practice in corporations. Massive downsizing has
often not achieved the intended benefits and in some cases has significantly harmed the
organization. Techniques that can help smooth the downsizing process:
a. Communicate more, not less
b. Provide assistance to displaced workers
c. Help the survivors thrive

Nestle: The Organizational Transformation

Latar Belakang Nestle

Nestle adalah sebuah perusahaan multinasional di Vevey, Swiss yang bergerak dalam
bidang makanan yang didirikan pada tahun 1867 oleh Henri Nestle. Perusahaan ini
menghasilkan makanan dan minuman seperti makanan bayi, susu, kopi, cokelat, dan lain-lain.
Perusahaan ini masuk dalam bursa saham SWX Swiss Exchange. Pada tahun 1842. Henry
Nestle membeli salah satu industri yang paling progresif dan lincah pada region itu pada masa
tersebut. Ia terlibat dalam proses produksi minyak kacang (digunakan sebagai bahan bakar
lampu minyak), minuman keras, rum, dan cuka.
Henry Nestle juga mulai memproduksi dan menjual air mineral bergas dan lemonande,
meskipun pada tahun-tahun krisis dari 1845-1847 Nestle menghentikan produksi air
mineralnya. Nestle mulai tumbuh dan berkembang menjadi sebuah perusahaan makanan
terbesar di dunia, serta perusahaan makanan dan minuman yang telah dipercaya oleh banyak
orang di seluruh dunia secara turun temurun hingga sekarang. Perusahaan Nestle tersebar di
seluruh mancanegara, Nestl berkomitmen untuk tetap mengembangkan produk-produk
melalui inovasi dan renovasi demi memuaskan kebutuhan konsumennya di seluruh dunia.
Visi dan Misi Nestle

Nestle mencoba memberikan dan memfasilitasi yang terbaik untuk kehidupan masyarakat
melalui cara hidup mereka di dunia dengan memenuhi kebutuhan konsumen dan memberikan
solusi. Nestle juga memberikan kontribusi pada kualitas kehidupan yang lebih baik.
Nestle selalu memperhatikan lingkungan sekitar dengan cara menciptakan lingkungan sehat
bagi semua orang di seluruh dunia. Pihak Nestle merealisasikan keinginannya untuk
memberikan dan menciptakan lingkungan yang sehat untuk semua orang di seluruh dunia
dengan mengadakan kerjasama dengan para ahli untuk memberikan dan mengantisipasi
masalah-masalah tentang lingkungan sehat bagi seluruh dunia.
Tujuan Nestle

Nestle berkeinginan kuat untuk memberikan produk-produk yang sehat bagi masyarakat luas
di seluruh dunia sehingga orang-orang di seluruh dunia dapat terjamin kesehatannya dengan
hadirnya produk-produk Nestle yang terjamin kualitasnya. Selain itu, Nestle mempunyai
tujuan seperti kebanyakan perusahaan lainnya yaitu ingin dapat bersaing dengan perusahaan

lainnya dengan persaingan yang sehat dan dapat menguasai pasar dunia. Sekarang tujuan dari
perusahaan Nestle untuk menguasai pasar dunia secara sehat sudah hampir terwujud dengan
menggunakan strategi pasar yang bagus serta kerja keras Nestle semakin kuat dan
berkembang dengan pesat.
Strutur Organisasi Nestle

Kinerja Nestle

Di pasar dunia, Nestle menunjukkan grafik yang sangat menanjak dari tahun ke tahun. Hal ini
terbukti dengan maraknya pabrik-pabrik yang berdiri di hampir seluruh dunia. Nestle selalu
memberikan sesuatu yang baru setiap waktu ke waktu. Nestle juga menghadirkan produkproduk yang baru dengan berbagai bentuk kemasan yang baru sehingga harga dari produk
Nestle dapat terjangkau oleh semua kalangan masyarakat luas di seluruh dunia. Selain
kegiatan-kegiatan yang bersifat komersial Nestle pun mengadakan kegiatan-kegiatan sosial
dengan memberikan santunan kepada yayasan-yayasan soial di seluruh dunia.

Jaringan Internasional

Nestle adalah bentuk usaha Joint Venture. Dengan menggunakan bentuk usaha ini, Nestle
mempunyai keuntungan yaitu perusahaan dapat mengambil manfaat dari mitra lokalnya

mengenai pengetahuan tentang kondisi persaingan, budaya, bahasa, sistem politik dan sistem
bisnis di negara dimana perusahaan akan didirikan. Ketika perkembangan biaya dan atau
risiko pembukaan pasar luar negeri tinggi, suatu perusahaan dapat mengambil keuntungan
dengan cara berbagi biaya dan atau risiko ini dengan mitra local, Sehingga Nestle dapat
berkembang dengan cepat dan terjalin hubungan yang kuat.

Produk Nestle
Nestle mengeluarkan beberapa produk bagi kebutuhan masyarakat, meliputi:
a. Kembang Gula, Coklat, dan Makanan Ringan

b. Kopi

c. Minuman

Pembahasan Study Kasus

Disini Nestle melakukan first order change dan second order change:
1. First order change
Melakukan continous improvement dengan restrukturisasi.
2. Second order change
Melakukan merger, akuisisi, ekspansi dan downsizing.
Brabeck melakukan pendekatan incremental, berfokus pada bagaimana untuk
memperkuat dan mempertahankan kekuatan daripada mengubah internal perusahaan.Selain
itu juga dikarenakan keberhasilan Nestle di periode-periode lalu menyebabkan Brabeck tetap
ingin mempertahankan factor fundamental keberhasilan Nestle.Namun, kadangkala tetap
perlu dilakukan perubahan dalam lingkup second-order dalam kondisi tertentu, seperti
downsizing pada saat krisis finansial. Disini Brabeck sebagai interpreter, yang mengingatkan
kita sebagaimana perubahan yang bersifat adaptive, reactive, atau transforming bukanlah
suatu tujuan yang mutlak untuk dilakukan akan tetapi bergantung pada sudut pandang dari
masing-masing pihak yang bertanggung jawab terhadapnya. Bagian dari peran manajer
perubahan adalah untuk membentuk sudut pandang tersebut terlihat masuk akal untuk seluruh
anggota perusahaan mengenai apa yang sebenarnya terjadi di dalam perusahaan tersebut.
Beberapa pelajaran yang bisa kita dapatkan dari kasus Nestle ini adalah:
1. Downsizing, divestasi karena krisis keuangan
2. Penerapan teknologi, untuk mempermudah dan mempercepat proses bisnis.
3. Merger/acquisition, untuk menjalankan misi dalam berekspansi, maka dilakukan akuisisi
terhadap perusahaan-perusahaan di luar negeri